Introduction
Understanding and defining your material data points is crucial for effective sustainability reporting and compliance with regulatory frameworks like the Corporate Sustainability Reporting Directive (CSRD). Materiality helps companies focus on the most relevant data points that impact stakeholders' decisions. This article will guide you through the importance of materiality, its connection to data collection, and how to report double materiality results using Greenly's ESG reporting platform.
What is Materiality?
Materiality refers to sustainability matters that significantly impact stakeholders' decisions about a company. In the context of CSRD, it helps isolate the most relevant data points from the European Sustainability Reporting Standards (ESRS) framework, which includes over 1100 data points covering topics like climate, pollution, resources, and workforce.
Connections Between Materiality and Data Collection for CSRD
Materiality in the CSRD framework determines the relevance of each data point based on its association with specific ESRS or sub-topics. Here's how it works:
If a data point is related to only one sub-topic: it is considered material if the sub-topic is material
If a data point is related to several sub-topics: it is material if one or more of the sub-topics are material
If a data point is not related to any specific sub-topic: it is material if one or more of the ESRS sub-topics are material
This hierarchical approach ensures that the most impactful data points are prioritized, aligning with stakeholder interests and regulatory requirements.
How Double Materiality Results are Reported in the Data Collection Module
Once materiality is defined at the sub-topic level in Greenly's Double Materiality module, the platform determines which data points are material for your company. Follow these steps to report double materiality results:
1. Validate Results: fully validate the Double Materiality analysis results to initialize materiality in the data collection module.
2. Automatic Population: the materiality column in the database is automatically filled, indicating whether each datapoint is material or not.
3. Filter Material Questions: Use the filter Materialitt to display only your material forms, streamlining the reporting process. Also use the filter Mandatory Level > Must submit data + Data or Justification to only show the material forms for which you must provide an information.
4. Refine the materiality of proposed questions: If necessary, you can also decide the materiality at datapoint level, if the first screening proposed by Greenly (at sub-topic level) is not accurate enough
e.g. As a consulting company the datapoint about "total energy consumption from nuclear sources" is not material, as this information mostly relevant for high-consuming companies or relying too much on fossil and non-renewable sources, so it is not very important to describe the most significant Impacts, Risks and Opportunities I have defined in the Double materiality Analysis. However, the datapoint for "Total energy consumotion from electricity, heat, steam and cooling" is material, as this KPI is a more general indicator to measure my impacts on the Energy sub-topic.
This structured approach simplifies the complex task of identifying and reporting on material sustainability issues, ensuring compliance, and effective communication with stakeholders.
Conclusion
Defining and reporting your material data points is essential for comprehensive and compliant sustainability reporting. Greenly's platform offers a robust solution to navigate the intricacies of materiality and data collection, ensuring that you focus on the most impactful sustainability issues. By leveraging Greenly's tools, you can confidently address stakeholder concerns and meet regulatory requirements, positioning your company as a leader in sustainability.
Greenly is here to support you in every step of your sustainability reporting journey, providing the tools and insights needed to make informed decisions and demonstrate your commitment to sustainable practices.